Kyle Bass is a hedge fund manager who rose to fame by predicting the 2008 financial crisis. He’s ringing an alarm again. In a recent Fox Business News interview, Mr. Bass claimed there’s a 40-50% chance of a brief recession in the United States.
The crisis is likely to come from Asia’s credit bubble that has been forming for the past decade. He feels the crisis will unwind in the next couple of years, and will impact countries outside the region, including the United States. But, America is only likely to suffer a bit.
He’s actually not the only well-known investor to issue such a warning. Not long ago, George Soros has warned investors as well.
While Kyle Bass is a recognized persona in the investment world, he’s also a controversial figure. When his investment performance declined, Mr. Bass resorted to tactics many consider to be quite unethical. Together with Erich Spangenberg, he began to sue pharmaceutical companies over patents and then shorted their stocks. (Shorting involves betting on declines of stock prices.)
These challenges were undertaken by a forefront organization, the Coalition for Affordable Drugs. Unfortunately, these lawsuits only delayed the time the drugs could be taken to the market, thus endangering lives of patients.
That’s not all. Previously, as a shareholder of GM, Kyle bass blamed the victims of car accidents involving GM vehicles by claiming they weren’t using the seat belts properly, or that they were drunk. The deaths actually resulted because of faulty power steering and airbags used in GM cars.
Mr. Bass also came to defense of the Argentinian government. When Argentina defaulted (again) on its sovereign debt, the bondholders obviously sought to recover some of their investments. But, Bass called them immoral people who keep poor counties hostage. It came out that he has had some close relationships with the Argentinian leaders.
Kyle Bass, born in 1969, is the founder of Hayman Capital Management, a hedge fund based in Dallas, Texas.